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EU Regulation No 1210/2010 and its implications

by Ursula Kampmann

January 15, 2013 – On September 7, 2010 the EU Regulation No 1210/2010 concerning authentication of euro coins and handling of euro coins unfit for circulation has been issued. It states that credit institutions must check for authenticity all banknotes and coins they have received removing counterfeits and coins unfit for circulation. According to the Regulation these coins are to be destroyed physically at central points to prevent them from being put back into circulation. 31 December 2014 is the scheduled effective day when the prescriptions of the Regulation must have been implemented practically by all member states.

Mrs Andrea Lang from Austrian Mint explained to us what coins will be withdrawn. Particularly we are speaking about coins rejected by coin-processing machines – a fact interpreted rather amply in Austria. Regarding this Mrs Lang stated: ‘We take back what has been handed over to us.’ Additionally this Regulation applies to coins thrown into a fountain and mechanically damaged coins from fires, shredders and coin scrap from incinerator plants.

One point of the Regulation is of crucial importance, and that is Chap. III art. 8 §3 which states succinctly ‘that after withdrawal, euro coins unfit for circulation are destroyed by physical and permanent deformation, so that those coins cannot be put back into circulation or be submitted for reimbursement.’Although the Regulation describes in all details what coin-processing machines comply with EU requirements the destruction of the coins is not specified at all.

A specification of this process would have been important, though. Indeed, the German Federal Bank, Deutsche Bundesbank, faced big losses because the VEBEG, the Federal Collecting Society, had operated rather carelessly.This scandal was publicised in March 2011. Crooks bought destroyed coins as scrap metal and exported them to China where the material was joined to coins again. During a normal transaction nobody would have been deceived by the partially heavily deformed coins. But the exchange of larger quantities of these coins unfit for circulation at the Deutsche Bundesbank was made possible by the use of the opaque so-called ‘safe bags’ because the content of these bags is checked only by weighing and random samples. In the enormous mass of coins which the Federal Bank accepts every day, the relatively smaller sums the frauds injected were not detected. But these sums made up a larger sum all the same. At court it was proved that the Federal Bank lost at least half a million euros. The real loss, though, had probably been much higher, according to the chief prosecutor at least 20 million euros.Anyway, the process against the seven impostors has been re-opened at the beginning of the year. The Federal Court in Karlsruhe had previously reversed a judgment of the Frankfurt State Court challenging whether the submission of destroyed coins at the Federal Bank is chargeable at all since exchanging the coins at the Federal Bank the defendants did not put the money ‘into circulation.’

Should that be considered legally valid the aspect of coin destruction and, above all, of the security of scrap metal recycling is not only gaining a completely new importance but also high priority. Because in the course of this year it must be defined what exactly is going to happen to the ‘destroyed’ coins in each Euro state.

You can read the complete text of the EU regulation in all languages of the European Union here.